This blog began as an online newspaper about Kings Cross, Sydney. It now focuses on the deep problems of drug prohibition - which are so intrinsic to Kings Cross anyway - and exposes the many flaws in the prohibitionist argument, and the pseudo-science that governments fund to prop up their unjust and ineffective laws. Comments are welcome, but please be polite! Content on this site reflects only the views of the writer and are not necessarily those of the editor or any other organisation.

Saturday, October 22, 2011

Hard data backing the Occupy Wall Street movement in Australia

The following is my paraphrase of an analysis by Andrew Cornell that appears in today's Australian Financial Review, Perspective section, page 50 under the headline 'Arab Spring, American Fall'. As the AFR paywalls its website I can't link directly to the full story. But given the shrill, near-moronic critiques of the Occupy Wall Street movement coming from conservative apologists for the rich, I thought it important to spread this information.

A parallel can be argued between the cosying-up of right-wing shock-jock Alan Jones with Greens Leader Bob Brown over coal-seam gas, and traits shared between the Occupy Wall Street (OWS) movement and the Tea Party in the US. While both movements are political opposites, they are both internally contradictory and unfocused, but so was the Arab Spring a year ago, showing that is no barrier to effectiveness.

Australia’s OWS movement might have less to complain about than its US parent but the distortion of executive remuneration at the expense of workers and shareholders (ie our superannuation) is a common cause.

Here, the annual general meeting of GUD Holdings has already seen its remuneration report voted down by shareholders, while Wesfarmers has been linking remuneration more strongly to performance targets and ANZ Banking Group’s Mike Smith has frozen executive salaries, recognising that “the market is on springs”.

The weak empirical data underpinning executive pay rises is causing anxiety among those who receive them and those who award them, two groups that are joined at the hip as demonstrated by Lucian Bebchuck and Jesse Fried’s Pay Without Performance: the Unfulfilled Promise of Executive Compensation. Harvard-qualified economist Diane Coyle uses orthodox economics to justify similar conclusions in her work The Economics of Enough.

When a shareholder raised OWS concerns about executive pay at Thursday’s Amcor AGM, chairman Chris Roberts responded with a flawed argument, urging the questioner to do some “serious study”, then referring him to an opinion piece by the rabid right that agreed with his views. But he ignored the rigorous works cited above, indicating it is perhaps he who needs to do some "serious study".

Ann Byrne, chief executive of the Australian Council of Superannuation Investors, says the past ten years have been far better for CEOs of the top 100 companies than for investors when remuneration is compared to share value. Australian Bureau of Statistics data show wages equated to nearly 57 percent of economic output in 2001 but have now dropped to just under 37 percent.

Meanwhile, management typically looks at tightening labour conditions to make productivity gains without applying the same criteria to itself. But productivity is more closely linked to quality of management, concludes Roy Green, dean of the faculty of business at the University of Technology, in Management Matters in Australia: Just How Productive Are We? He notes Australia’s productivity has fallen since 2009 compared to OECD countries. Ernst & Young support this conclusion in the firm’s “Australian productivity pulse”.

"From 1973 to 1985, the financial sector peaked at 16 percent of domestic corporate profits. In the 1990s it reached postwar period highs by going between 21 and 30 percent. But this decade it hit 41 percent. These profits weren’t from products, and weren’t always from finding the best use for capital, but from money making more money for a new class of super-rich financial traders. And now, when their risk taking, greed, and selfishness created a mess for so many others, we bailed them out and left everyone else to suffer in the economic wilderness of unemployment, home foreclosures, pension losses, deep middle-class insecurity, and rising poverty rates."

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About Me

Hello again. world. I am a journalist, designer and photographer eking out a living by grazing on economic opportunities that come my way. I have run my business, Superkern Design Pty Ltd, since 1991. The gross oversupply of designers being pumped out by a dysfunctional university system has made it very difficult to survive as a designer since the late '90s, but on balance I like the advantages of working for myself at home. The older I get, the more human affairs look farcical. The average person is pretty damn average, you see. But there you go. I try to inject some commonsense into the public discourse which, at least in Sydney, is increasingly dominated by moral panics and middle-class agendas of control and gentrification. I don't quite understand why people from alternative subcultures tend to be quite happy for the middle class to live their lives as they wish, but the reverse is not true. And yet this same middleclass constantly use the words "diversity" and "tolerance". It's a funny old world.
See my Superkern and photoart sites linked above.